U.S. hospitals want Congress to forgive $100 billion in Medicare loans that were made earlier this year to help the healthcare system amid the coronavirus crisis, CNBC reports.
The problem comes from the fact that the administration will begin withholding new Medicare payments Aug. 1 unless the loans made earlier this year are repaid. If not paid in a year, the loans will result in a 10 percent interest charge on top of how much the loan is for, the news outlet said.
According to the Federation of American Hospitals (FAH), that might not be feasible. FAH Chief Executive Officer Charles Kahn said the debt “could be crippling for hospitals in the midst of new Covid surges,” CNBC reported. The FAH has a countdown clock of the repayment deadline looming.
And American Hospital Association (AHA) Chief Executive Rick Pollack said the loans deserved to be forgiven because they are a “mechanically easy way to provide instant relief to people on the ground.” The AHA said the pandemic had resulted in a new amount of financial pressure, and one not offset by previous federal financial aid measures like the CARES Act.
Without more relief, the group said half of all U.S. hospitals were at risk of operating in the red, CNBC reported, with a median loss of 7 percent, according to a Kaufman, Hall & Associates survey.
As the coronavirus has continued to surge, hospitals have found themselves in a difficult position, with increased revenues from an influx of COVID-19 patients, but less revenue from elective procedures.
Under the House’s recent proposal to restructure Medicare loans, the hospitals would have more time to pay off the loans at an interest rate of 1 percent. The Senate is reportedly also considering similar measures.
And Raymond James analysts say there’s also apparent bipartisan support for giving hospitals and other such companies more funds, with Republicans pushing for later dates to pay back the loans. However, outright forgiveness of loans is unlikely — Republicans have begun to start getting more fiscal about their funding measures, according to Ipsita Smolinski, managing director at consulting firm Capitol Street, CNBC said.